- October 4, 2016
- Posted by: Thomas Tang
- Category: Finance & accounting
The federal government has now closed a housing tax loophole that requires Canadian Tax Filers to prove the principal residence exemption starting on their 2016 tax return if they sell their Canadian homes.
The Canadian Tax Filers include those non-residents who own and sell their Canadian homes.
This plug is in an effort to control the housing prices which have soared dramatically the last few years in the Vancouver and Toronto markets, due to foreign investors, who own Canadian homes and reap healthy profit through speculation and Canada’s stable economy.
“We recognize that there are different housing markets in different parts of the country and multiple factors that impact these markets,” says Morneau. “We believe these measures ensures tax fairness.”
“Tax filers will have to prove the principal residence exemption on their tax return,” says Finance Minister Bill Morneau. “This exemption is for people who legitimately own a house and live in Canada and we feel this is an appropriate way to manage this risk. It ensures that everyone is playing by the rules.”
The CRA will audit tax forms,” says Morneau, “to verify that the beneficial owner lives here in Canada and is living in the home in order to claim and receive the Principal Residence tax Exemption (PRE).”
For those Canadians holding multiple properties, including residential homes and cottages, there are still ways to minimize your tax, as a result of your sale of one of the properties. In addition, having such properties under a Canadian Trust is a good way to avoid paying tax, please consult your CPA today or contact Tang & Partners LLP, 416-987-6005 or email at info@tang.ca